Idyllic beach towns have suffered some of the sharpest falls in real estate prices due to rising interest rates.
Byron Bay on the north NSW coast is among the hardest hit markets, with the median house price in the parish falling 15 per cent through October.
The median home price of $1,563,047 is still expensive, well ahead of the $1,257,625 in the Sydney area, CoreLogic data showed.
In Ballina, just a short drive away, the median home price fell 9.1 percent to $1,022,563.
Idyllic beach towns have suffered some of the sharpest house price falls due to rising interest rates. Byron Bay (pictured) was among the hardest-hit markets as the median home price in that area fell 15 percent over the year to October
Outside of Sydney and Melbourne, Byron Bay and Ballina are among the few home markets where values have actually declined over the past year.
Where real estate prices are falling
BYRON BAY: Down 15 percent in one year to $1,563,047
BALLINA: Down 9.1 percent in one year to $1,022,563
GRANDSYDNEY: Down 9.3 percent to $1,257,625
GREAT MELBOURNE: Down 6.7 percent to $924,492
TWEED: Down 4.2 percent to $1,001,354
WOLLONGONG: Down 2.6 percent in one year to $987,059
Source: CoreLogic median regional house price data by municipality, October 2022. Sydney and Melbourne are for comparison
Both fall within the broader Richmond Tweed area, where the median home price is $932,395.
CoreLogic economist Kaytlin Ezzy said upscale regional areas, which saw the biggest price jumps when interest rates were at a record low of 0.1 percent, are now suffering the sharpest declines.
“Successive rate hikes, persistently high inflation and declining consumer sentiment have meant that the pace of depreciation in Australian regional property markets has accelerated,” she said.
“Unsurprisingly, the Richmond-Tweed region saw the sharpest fall in property values.
“Throughout the Covid era, values have skyrocketed, rising more than 50 percent and taking the median home value to more than $1.1 million. ‘
But since April, values in the Richmond-Tweed area have fallen by 16 percent.
They plunge 11.7 percent in the three months to October.
Other regional areas saw strong annual growth, but levels declined in the three months to October in the southern Highlands and Shoalhaven area.
The 7.1 percent quarterly decline took average home prices in an area that includes Bowral and Nowra on the south coast down to $936,024.
The Sunshine Coast’s 7.1 percent quarterly decline sent house prices down midway to $1,005,446, while Gold Coast prices fell 6.4 percent to $1,003,676.
The regions comprising Wollongong and Newcastle also slid on a quarterly basis, with the Illawarra slipping 6.1 percent and home prices down to $971,873, while Lake Macquarie values fell 6 percent and median home prices to $841,296 -dollars lowered.
Ballina (pictured Breakwater), just a short drive from Byron Bay, saw an average home price drop of 9.1 percent to $1,022,563
The Reserve Bank of Australia raised interest rates in November for the seventh straight month to a new nine-year high of 2.85 percent.
And that’s despite Governor Philip Lowe’s repeated suggestion last year that interest rates would remain at a record low of 0.1 percent “at the earliest” until 2024.
The RBA released new recommendations on Tuesday, in which it pledged not to release explicit forecasts for the policy rate to the public going forward.
“Forward guidance on interest rates is not always provided, although the Board will continue to outline how monetary policy stances will be adjusted in response to evolving economic conditions,” it said.
The Reserve Bank also acknowledged that its forecasts for interest rates and its interventions in the government bond market to make them attractive to investors failed as Russia’s invasion of Ukraine pushed up crude oil prices and, in turn, inflation.
“Neither was well placed to respond to the unprecedented global events,” it said.
The Commonwealth Bank, Australia’s largest home lender, said minutes of the RBA’s November meeting released Tuesday indicated there might be a pause before the next rate hike.
Gareth Aird, head of Australia’s economics department at CBA, said bad economic news could prompt them to reconsider a December rate hike that would raise the benchmark interest rate by 0.25 percentage points to 3.1 percent.
The RBA released new recommendations on Tuesday, pledging to refrain from forecasting interest rates going forward after Governor Philip Lowe (pictured) repeatedly hinted interest rates would remain at a record low of 0.1 percent through 2024
“Our central scenario is for the RBA to hike interest rates by 25 basis points at the December board meeting,” he said.
“But given that the RBA has hinted at the idea of a pause in the tightening cycle, a December rate hike is not a done deal, especially if data comes out weaker than expected over the next two days.”
Inflation rose 7.3 percent in the year to September – the sharpest rise in 32 years.
The RBA minutes said it was determined to bring inflation back to the 2% to 3% target, which would mean more rate hikes.
“The Board remains committed to bringing inflation back to target levels and will do whatever is necessary to achieve that outcome,” he said.
Higher interest rates mean banks are less able to lend, leading to further home depreciation.
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